From foreign investment to trade, Oman looks geared to create economic rumbles and overcome recent doldrums brought about by COVID-19 and low oil prices.
Top investors in Oman’s economy
The UK and the US were the countries that led foreign investment into Oman last year.
The UK contributed OMR7.92 billion ($20.6 bn) in investment projects, while the US pledged a further OMR1.84 bn ($4.8 bn), during the first three quarters of 2020, according to National Centre for Statistics and Information (NCSI) data.
Foreign direct investments (FDIs) from the UK amount to nearly half of the foreign investment received by Oman during this period or about OMR15.65 bn ($40.65). Investment from Britain is guided by the UK-Oman Comprehensive Agreement, signed in May 2019.
Investments during the first three quarters of 2020 were 11% greater than the same time frame for the previous year when the UK provided funding worth OMR7.26 bn ($18.9 bn).
Future investment in Oman is likely to expand into renewables and green technology.
Trade between the US and Oman, on the other hand, is governed by the Free Trade Agreement signed between the two nations in 2009.
One of the key areas Britain is keen to invest in is Duqm, the upcoming port city that aims to be the axis of Oman’s non-oil future. A number of key installations, including the Port of Duqm, Duqm Dry Dock, the China-Oman Industrial Park, the Duqm Refinery, and many other facilities have either been built or are under construction.
The UK is funding several projects in Duqm, including the Duqm Refinery, Port of Duqm, and Duqm Naval Dockyard (DND).
US investments in Oman span a wide range of sectors, including consumer products distribution, oil and gas exploration, hospitality, and other services including engineering, information technology, financial, accounting, legal, consulting, and many more.
Other major foreign investors in Oman are China ($2.2 bn), the Netherlands (876 mn), India ($826 mn), and Switzerland ($727 mn).
In the GCC, the UAE ($3.27 bn), Kuwait ($2.4 bn), Bahrain ($1.14), and Qatar ($1.06 bn) all have significant holdings in Oman.
Of the investments made, the majority of the funds ($26.1 bn) went towards the oil and gas sector. The financial sector received another $3.82 bn in investment, while real estate activities saw a further $2.96 bn.
Oman port operations
Oman’s ports achieved growth in several commercial operations and volumes of direct import during H1 2021, handling 2.5 million containers (TEUs) as well as 28.8 million tons of general cargo, reported Oman News Agency (ONA).
Compared to the corresponding period in 2020, imported livestock witnessed a notice spike of 65% during the first six months this year (1.9 million heads). The import of vehicles and equipment dropped by 8% (55,500 vehicles and equipment imported or re-exported) due to the decline in the global economy and its impact on local and regional markets.
More than 4,400 vessels visited the Sultanate’s ports from January to June 2021.
Mohammed Al Mashani, Chief Corporate Affairs Officer at Port of Salalah said that the sizeable capacity of Salalah Port and its modern facilities cement its position as a maritime gateway and transshipment hub. The Port plays a crucial role in maintaining the flows of vital medical and food supplies, critical agricultural products, energy streams, and other goods and services essential to enhance commercial activities.
Batti Mohammed Al Shibli, Harbor Manager, at Sohar port, said that the port is “Upgrading its logistic operations with the objective of becoming a global logistics hub connected with Asian, European and African markets.”
The port saw tangible growth in handling operations (30% up in general cargo handling).
Hashim Tahir Al Ibrahim, Business Support Director at Port of Duqm Company, said that port operations there contribute to enhancing direct export and import of different commodities (petroleum, chemical, fishery).
The development of Dibba Port in Musandam is going to play an important role in attracting investments to the governorate as it will soon offer land and build-up areas for investors.
Ahmed bin Ali al Shehhi, head of the fishing port in the wilayat of Dibba, said, “The Dibba Port development project, coming up at a cost of around $104 mn, is part of the government’s plan to diversify the economy and work to develop fishing ports in the sultanate to be an attractive environment for investments.”
The area of the port following the completion of the expansion in December 2023 will increase from 97,000 sqm to 779,000 sqm.
The number of fishing vessels licensed in Dibba Port at the end of 2020 was 47, while the number of fishing boats using its facilities was 972, and the amount of fish exported from it was 11,209 tons.
Oman’s energy FDI
State-owned Energy Development Oman (EDO) has raised $2.5 bn in its first-ever financing transaction to permanently reduce the state’s budgetary commitments to Oman’s biggest oil and gas producer Petroleum Development Oman (PDO).
The bond was oversubscribed, which EDO said was a “testament to investors’ confidence” in both the company and the Omani economy.
EDO was set up by Muscat in December to take over some of the government’s 60% stake in PDO, which operates the giant block 6 license responsible for the bulk of Oman’s hydrocarbons output.
But unlike PDO, EDO was set up to function as a purely commercial body, thereby removing the financing burden from the cash-strapped Omani state, which was hard hit by the impact of COVID-19 and last year’s oil price downturn. An energy ministry source said at the time that PDO operations were costing the state in the region of $5 bn-$6 bn annually.
EDO’s ability to secure its own funds will be critical to meet PDO’s ambitions of lifting crude output to 700,000 bpd by 2024 from 616,000 bpd in 2019.
EDO will also help Oman transition from hydrocarbons to renewable energy. PDO already uses 1GW of solar power to generate steam for enhanced oil recovery at its Amal heavy oil field. It launched its first utility-scale solar project, a 100MW plant at block 6, in 2019, and is looking for further renewable projects to invest in.